Genentech to Buy Biogen Plant

BIOMANUFACTURING

Genentech plans to increase its manufacturing muscle with the acquisition of a just-built biopharmaceutical plant in Oceanside, Calif., from rival Biogen Idec. The purchase, for about $408 million in cash, will increase Genentech's bioreactor capacity by 35% and reinforce its role as the world's largest biologics manufacturer.

For Biogen, the sale is yet more fallout from the voluntary withdrawal of the multiple sclerosis treatment Tysabri in February after a patient in a clinical trial died of a rare neurological disease.

Biogen had high hopes for the drug, which FDA approved last fall under an accelerated approval process, and expected to make it in the California plant. But following the withdrawal, the company says it can meet its foreseeable production needs from existing facilities in Cambridge, Mass., and Research Triangle Park, N.C.

Genentech plans to use the plant to make the cancer treatment Avastin, which FDA approved in February 2004. Genentech anticipates offering jobs to 330 of the plant's 430 employees and hiring 200 additional employees by the end of next year.

Christopher J. Raymond, a biotech stock analyst at Robert W. Baird & Co., has been warning of a production capacity shortfall at Genentech. In a report to clients, he says the Oceanside purchase should resolve the problem for 2007, although he is waiting to hear how the firm will meet demand in 2006.

The plant purchase announcement triggered a stock price decline at Lonza, a Swiss contract manufacturer, which some observers had expected to be tapped by Genentech to produce Avastin. Lonza already makes Genentech's Rituxan cancer drug under contract.

Lonza isn't commenting on the purchase. Last week, the company announced plans to invest more than $10 million to expand its clinical-scale biomanufacturing capacity in Slough, England. It also reaffirmed ongoing projects that will significantly expand biopharmaceutical production in Portsmouth, N.H., and Visp, Switzerland.